EUR/JPY technical analysis: Inside bar makes today's close pivotal

EUR/JPY created an inside bar on Wednesday, signaling seller exhaustion.
A close above 119.27 is needed to confirm a bullish reversal.

Omkar Godbole FXStreet Contributor

EUR/JPY created an inside bar pattern on Wednesday, which occurs when a specific period's high and low falls within the trading range of the preceding period.

The pair hit a high and low of 119.27 and 117.78, respectively, on Wednesday. The trading range fell within the high and low of 119.59 and 117.68 hit on Tuesday.

The inside bar candlestick pattern represents consolidation. However, in EUR/JPY's case, the pattern has appeared following a notable sell-off and represents bearish exhaustion and an impending bearish-to-bullish trend change.

That said, the trend reversal would be confirmed only if the spot closes today above the inside bar's high of 119.27.

That looks likely, as both the 14-day relative strength index and the moving average convergence divergence histogram are reporting a bullish divergence.

Daily chart

Trend: Neutral-to-bullish

Pivot points

1. R3 120.44
2. R2 119.87
3. R1 118.92
PP 118.35
1. S1 117.4
2. S2 116.83
3. S3 115.88

Author

Omkar Godbole

FXStreet Contributor

Omkar Godbole, editor and analyst, joined FXStreet after four years as a research analyst at several Indian brokerage companies.

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